Loan Officer Retention: A Training Approach

Retaining high-performing employees is a critical and challenging part of every manager’s job. Yet many of us don’t think much about retention until one of our star performers leaves, often to go work for the competition at a pay increase that we can’t counter.

When you lose a loan officer, it can take months to find a replacement, and the high cost to recruit high quality candidates can be steep. The vacancy also affects the morale and productivity of the entire office.

So why do most loan officers decide to leave? During exit interviews, many mention a desire for ongoing training programs. It makes sense: top producing employees succeed in part because they’re constantly seeking out the knowledge and skills they need to grow their careers and better serve their customers. Other reasons include the desire to feel appreciated and a general lack of commitment to the organization.

It makes sense to invest in training to retain loan officers versus paying exorbitant fees to attract new employees from competitor institutions. If you can create a “farm system” within your organization, you can foster generations of stellar loan officers who will not only feel more loyal to the company, but also bring in more business.

Here are a few steps to take to set up an effective training program to help reduce loan officer turnover:

  • Poll top and average performers separately, to find out what types of training they would find most valuable. Depending on their existing skill sets and level of experience, any of the following types of classes may apply: sales and communications skills, cross marketing techniques, regulatory refreshers, loan documentation basics, and negotiation techniques.
  • Offer traditional classroom courses and online options to meet the needs of as many individuals as possible. Your employees don’t have to take time out of the office to get many of the training classes they need. The Seattle Bank’s upcoming web seminar, Pricing Loans for Profits, is one example of the types of online trainings that are often readily available.
  • Provide financial incentives and perks for those who complete the training. You may consider providing bonuses to individuals who complete certain training courses and are willing to train others on the skills that they learned. You may also want to reimburse tuition for those who choose to earn certifications or advanced degrees related to the field.
  • Consider “branding” your training program to increase the perception that it’s a worthwhile effort that provides career success. This can help to give your training program prestige within your organization and minimize the perception that training is only for below-average performers.    
  • Measure the effects of training. Has turnover been reduced? Have “graduates” increased their productivity? Metrics can help to reinforce the value of the investment you are making to yourself—and to your board of directors.

In addition to training, there are several other steps managers can take to reduce turnover:

  • From the outset, make sure you’re recruiting individuals who are a good fit with your organization, who will be successful in your culture and work environment.
  • Address the fundamental causes of turnover, not just the symptoms.
  • Regularly assess employee commitment and morale. Get input from employees on what’s working for them.

Banks that do not effectively manage retention of loan officers minimize the chance of fully recouping their investment in those employees. Turnover is a loss to the organization and can result in additional monetary and non-monetary costs, including decreased innovation, lower productivity, and poor customer service. Training programs can help you reduce turnover, so that you can retain the best talent to serve your customers.

Jeff Turner, JD is president of Praxis HR, a human resources, training, and organizational development consulting firm that helps companies turn talent into profit. He is also president of the Seattle Chapter of the Society of Human Resources Management. If you would like more information about this or other human resources and employment practices issues, please contact Jeff via email at jeffturner@praxishr.com, by phone at 206.262.8133, or visit the Praxis HR website at www.praxishr.com.